Some complex operational systems, such as warfighting systems, assembly line systems, pharmaceutical product systems, power plants, and the like, are responsive to measures of effectiveness (MOE) and associated measures of performance (MOP), operational objectives, and failure modes. MOEs are typically used to measure the design of the operation system and correspond to the accomplishment of operational objectives. MOPs are often used to measure the performance of the operational system.
As operational systems become more complex and the demands thereon increase, there is a need to determine as optimal a use of the available resources for the processes of operational systems which maximizes the capability of the systems and assures success of the operational objectives.
One solution may be to leverage financial oriented economic model approaches to the operational system space. It is known, for example, that the focus of the financial markets is asset allocation in order to achieve wealth gain. The optimal dynamic allocation of resources of an operational system is similar in some ways to the economic models that optimally allocate financial assets among various investment options.
One economic model presented by Low, Mamaysky, and Wang (LMW) uses a concept of transaction cost to derive an optimal investment strategy that modulates the frequency of trading. The LMW model relies on a broadly applicable mathematical field of stochastic dynamic programming. The LMW model uses continuous time and can be referred to as a “fine-grained” model.
Another economic model, known as real options analysis (ROA), can handle large, discrete time events that are often confronted with investment options with an expiration limit. In operational terms, this means looking at asset allocation to maximize operational capability. ROA can be referred to as “coarse-grained” model because it may account for coarse-grained changes, especially those that arise from planned or unplanned events.
The difficulty lies in mapping, or transforming, the economic terms from the economic models to a set of terms that apply to the operational domain of operational systems and which remain consistent across both the fine-grained and the coarse-grained models.